The weakening of the Italian currency has given a boost to the country's trade prospects. The American Express Bank, for instance, reckonsthe lira is 30 per cent undervalued against the mark, and that as a consequence exports will increase by at least 10 per cent this year. That is great for Italian businessmen - not so good for their competitors. The European Commission, the European Union's executive bureaucracy, is concerned about the impact this will have not just for its plan for a single currency but also for the single market.
Underlying this is continuing concern about the fall of the dollar and the rise of the mark, which have brought forth public lamentation from European industry. In Germany, economic recovery is slowing because of the strong mark, which has risen 25 per cent against the dollar in the last year; 14 per cent against sterling and a whopping 30 per cent against the lira.
To the grumbling from German industry has been added the unhappiness of French manufacturers. Alain Gomez, president of Thomson, the electronics group, called it "economic warfare" last week. French businesses are concerned about the risks to their sales, not just from the fall of the dollar but also from the increasing competitiveness of Italian industry.
France is in a particularly important position. The Franco-German couple is the key relationship in the European Monetary System, as in the political direction of Europe. The French franc has wobbled against the mark, losing 3.5 per cent of its value since the beginning of the year. But against the dollar it has gained 8.9 per cent; against sterling 8.5 per cent and it has soared by 10 per cent against the lira.
None of this is new. Monetary turbulence has been the mark of the 1990s; the problems of the dollar, the weaker European currencies and the strong German unit have combined to oust the pound and the lira from the exchange rate mechanism and then force a loosening of its disciplines.
What is new is the growing unhappiness about the implications of this for French economic policy, now and in the run-up to a single currency. The arrival of a new face at the Elysee Palacehas injected a note of fresh doubt into the European response to exchange rate problems. There is no new government as yet, and hence a period of uncertainty that could unsettle both the franc and the EMS.
The French Gaullists are by nature suspicious of US policy. Charles De Gaulle famously said that the Americans used the nuclear bomb only twice; but that they used the dollar every day. The EMS was conceived of as a "zone of monetary stability" in the wake of the US decision to break apart the Bretton Woods system. For the last decade, it has been the orthodoxy in France that the franc fort and - since 1991 - the pursuit of a single currency was the way to counter the hegemony of the dollar and the foreign exchange markets.
That has been put in question during the election campaign, by Philippe Seguin, a French Euro-sceptic who is leading opponent of the Maastricht treaty and a key figure in Jacques Chirac's team. Mr Seguin clashed publicly with the independent Bank of France during the campaign, and has called into question the worth of the franc-fort policy.
Mr Chirac is unlikely to follow Mr Seguin down this path; but what concerns France-watchers in the EU is the new President's ability to say many things about Europe, veering from anti-Europeanism to his promise to put France at the heart of Europe.
This uncertainty extends to the direction of macro-economic policy under a new government. Mr Chirac has put unemployment at the top of his agenda. "Our main battle has a name: the fight against unemployment," he said. A revised budget is due by the summer, but it will have to be a delicate balance between spending increases to cut dole queues and tax increases to control the fiscal deficit.
Edouard Balladur, France's former prime minister, wrote to Jacques Santer, the European Commission President, earlier this year to ask for action on the currency front. The Commission is beavering away on a response, but it is hampered by the lack of instruments. Anything that would compromise the free flow of goods, services and capital is ruled out. But macroeconomic surveillance has proved as weak a tool for correcting currency fluctuations within Europe as it has within the Group of Seven.
While Mr Gomez and other French industrialists can call for a reinforcement of EU preference against the US, the same options are not readily available against countries within what is supposed to be a single internal market. That may cause political antagonisms directed against Italy and Britain.
The Commission wants to ensure that everyone stays on track for a single currency in 1999, and that will be all but impossible if there is further currency turmoil, or if France changes tack. It also wants to keep markets open within Europe and with the rest of the world, and that will get more difficult if industry faces continuing pressures from exchange rate changes that are seen as competitive devaluations. And it wants to ensure that there is no reintroduction of capital controls.
All this is playing out against an unpromising international background. The US and Japan seem on the brink of fresh trade conflict; Washington is also hammering on European doors, notably the one in Bonn, for more trade access. A fresh burst of currency problems may be inevitable; and they could prove very politically embarrassing for Brussels.